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Course Outline
The topics in Bank & Financial Institution Modeling teach you everything you need to know about
accounting, regulatory capital, operating models, valuation, and merger models and LBO models for
banks, insurance firms, and other companies that make money with money.
If youre in a time crunch and needed answers yesterday, you can skip to whatever you need
help with but if you want to go through everything from top to bottom, you can do that too.
In total, there are 71 lessons with accompanying Excel files as well as 5 quick reference guide
PDFs on key topics. That amounts to over 26 hours of video altogether, which may seem like a
lot. But dont worry: everything is broken into bite-sized chunks so you can digest it easily.
All the content is downloadable to your preferred device (works with QuickTime and most
other media players and on all common devices including desktops, laptops, iPad, iPhone, and
iPod).
NEW: You also get full transcripts of all the videos. There are over 300,000 words in all, and all
the transcripts are also downloadable. Use the transcripts to suit your preferred learning style or
to quickly revise key concepts without having to find the exact location in the videos.
Easily keep track of your progress: As you move through the lessons, you can check off what
youve completed and whats still on your to-do list.
Fast answers to all your questions: Our expert support team is standing by to answer any
questions you have about any of the content, 365 days a year.
NEW: Quizzes and Certifications. After you have completed the course, you will be eligible to
take our challenging Certification Quiz. Once you pass the Quiz, youll be issued a Certificate that
you can add to your resume / CV and refer to in interviews.
Included Lifetime Access: You also get lifetime access, so you can come back to the Course
whenever you need it whether thats in 1 month, 1 year, or 10 years.
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"I interned at a BB bank this past summer in the Financial Institutions Group and
the material that I have learned in the Bank & Financial Institution Modeling
course is incredible.
"I work in the Treasury Department of a regional bank and the Banking course
especially has been helpful.
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Resources:
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1.5 Provisions for Credit Losses & Loan Loss Reserves (Video Length: 29:43)
Normal companies expect to maintain the value of their assets, but banks expect borrowers to default
on their loans and so they need to account for this in their statements. Youll learn how to do that in
this lesson, and well walk through an example of how a bankruptcy and sale of collateral would affect
the loan loss reserves, provision for credit losses, and all 3 statements.
1.6 Regulatory Requirements & Capital Adequacy (Video Length: 42:09)
This lesson will give you a crash-course on bank regulation, including Basel I, Basel II, and Basel III, and
teach you how to calculate risk-weighted assets, Tier 1, Tier 2, and Total Capital, and key metrics like the
capital ratios and the Leverage Ratio.
Youll also learn why these are critical components of any model for a bank, and how they directly
impact the operating model and valuation for JP Morgan.
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Resources:
2.1 Operating Model Overview & Loan Projections (Video Length: 21:25)
In this lesson, youll learn how to build a complete operating model for JP Morgan and how to project
their gross loan portfolio by loan type based on SEC filings and equity research.
2.2 Loan Charge-Offs & Recoveries (Video Length: 24:45)
In this video, youll learn how to estimate net charge-offs by projecting gross charge-offs and recoveries
by loan type; well add everything together at the end to arrive at the net charge-offs number.
2.3 Gross Loans, Net of Charge-Offs & Key Metrics (Video Length: 22:21)
Well link together the previous 2 videos in this lesson by teaching you how to calculate the provision for
credit losses, gross loans prior to and net of charge-offs, as well as average loan balances and key
metrics like the net charge-off ratio, the reserve ratio, and more.
2.4 Balance Sheet Projections (Video Length: 32:48)
In this lesson, youll learn how to project a banks balance sheet based on its loans and deposits, and
which items move independently of those key items vs. which ones are linked to the banks borrowing
and lending capabilities.
2.5 Interest-Earning Assets & Interest-Bearing Liabilities (Video Length: 22:50)
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Well begin moving from the balance sheet to the income statement in this lesson by projecting JP
Morgans interest-earning assets and interest-bearing liabilities and youll learn how to project the
interest rate spread and the net interest income based on these items.
2.6 Income Statement Projections (Video Length: 39:00)
In this video, youll learn how to project JP Morgans non-lending businesses such as investment banking
and asset management; youll also see which income statement line items are tied to the balance sheet
and which move independently of assets and liabilities.
Well conclude by linking in the provision for credit losses, projecting non-interest expenses, and
calculating net income, net income to common, and EPS.
2.7 Cash Flow Statement Projections (Video Length: 30:17)
In this lesson, youll learn how to project JP Morgans cash flow statement by linking in the appropriate
items from the income statement and balance sheet and making assumptions for the rest; youll also
see why certain items such as stock repurchases and dividends cannot be projected until we know the
regulatory capital of the bank.
2.8 Linking the Statements (Video Length: 15:17)
You will learn why a banks 3 financial statements link together differently from a normal companys in
this lesson, and see how to balance the balance sheet with the federal funds sold and federal funds
purchased line items.
2.9 Capital Adequacy Calculations (Video Length: 27:00)
In this lesson, well project JP Morgans risk-weighted assets, Tier 1 Common Capital, Tier 1 Capital, Tier
2 Capital, Total Capital, and Tier 1 Leverage based on the derivation in their SEC filings.
Youll also learn how the definitions for many of these items are far messier in the real world than they
are in theory.
2.10 Dividends Issued & Shares Repurchased (Video Length: 31:43)
Once we know JP Morgans capital levels, we can back into the amount of dividends they can issue and
the share repurchases they can make each year and thats what youll learn how to do in this lesson.
Youll see why this calculation is inherently circular and how to link these numbers to the rest of our
model.
2.11 Operating Model Summary (Video Length: 25:50)
When an MD is breathing down your neck to understand what a company is doing, you cant give him a
50-page Excel printout you need a summary, which is what youll learn to create here.
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You will calculate key metrics such as ROE, ROA, and Tangible Book Value here that will lead us directly
into the valuation of JP Morgan.
Resources:
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In this lesson, youll learn the intuition behind a multi-stage dividend discount model and how we use
dividends as a proxy for free cash flow for a bank. Youll also learn how to set up the key assumptions
and how we use risk-weighted assets and return on tangible common equity to drive the model.
3.5 Dividend Discount Model Cost of Equity (Video Length: 11:08)
Youll learn how the cost of equity calculation is different for banks in this lesson, and why we dont
have to worry about un-levering and re-levering Beta; youll also see how we can use equity research as
a benchmark for what cost of equity should be.
3.6 Dividend Discount Model Calculating Dividends Issued and Present Value (Video Length: 20:05)
In this lesson, well go through the most important part of a dividend discount model the circular
calculation required to estimate dividends issued based on a minimum Tier 1 Common ratio.
Youll also learn several methods you can use to calculate the terminal value and how to tie everything
together to calculate the present value of equity for JP Morgan.
3.7 Dividend Discount Model Sensitivity Tables (Video Length: 16:09)
This video will show you how to arrive at JP Morgans implied per-share price and the key variables to
use in sensitivity tables that allow you to analyze its valuation under different assumptions.
3.8 Simplified Dividend Discount Model (Video Length: 25:13)
In this lesson, well take a step back and look at a more simplified dividend discount model that
eliminates some of the complexity introduced when we analyze a large bank like JP Morgan.
Youll also learn how to construct a model based on ROA rather than ROE and how everything changes
as a result.
3.9 Residual Income Model Overview (Video Length: 25:59)
Youll learn the intuition behind a residual income (excess returns) model in this lesson, and how its
very similar to how you would assess the value of a house. You will also learn how to modify the
dividend discount model to support a multi-stage residual income analysis instead.
3.10 Residual Income Model Calculating Excess Returns (Video Length: 20:52)
In this video, well finish up the residual income model by calculating excess returns based on ROE and
Cost of Equity youll also learn how to calculate the present value of equity in a residual income model,
including the terminal value calculation and why terminal value is often unnecessary for this type of
model.
3.11 Simplified Residual Income Model (Video Length: 20:07)
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Well step back from the traditional, complex residual income model here and instead focus on a model
you might use when preparing for interviews and youll learn how a few quick modifications to the
simplified dividend discount model lead to a simplified residual income model.
3.12 Valuation Summary (Video Length: 22:02)
Well conclude the valuation in this lesson by creating the traditional football field graph and
comparing all the valuation methodologies, including advantages and disadvantages of each one and
why you might use or not use various methods to value a bank.
Resources:
4.1 Bank Merger Model Overview and Key Differences (Video Length: 20:10)
In this lesson, you'll learn why the bank merger model is important, what it can tell us about bank M&A
deals, the key differences between bank merger models and merger models for normal companies, and
how we'll approach the JP Morgan / SunTrust M&A case study.
4.2 Changes to Operating Model (Video Length: 11:23)
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In this video, we'll show you how the model has changed compared to the JPM operating model and
valuation in order to support the merger model we are constructing. You'll also learn some of the key
assumptions required to project SunTrust's financial statements.
4.3 SunTrust Balance Sheet Projections (Video Length: 28:34)
You'll learn how to project SunTrust's balance sheet and determine the proper growth rates for loans,
deposits, and related items based on historical performance and equity research projections in this
lesson.
4.4 SunTrust Interest-Earning Assets & Interest-Bearing Liabilities (Video Length: 17:34)
In this video, you'll learn how to pull in line items from SunTrust's balance sheet to forecast its interestearning assets and interest-bearing liabilities, and how to properly project the interest rate spread to
determine its net interest income. You'll also learn one important factor we must take into account
when making projections for the seller in a bank merger model.
4.5 SunTrust Income Statement Projections (Video Length: 25:36)
This lesson will teach you how to project SunTrust's income statement and calculate its Net Income and
Net Income to Common and how the projections differ from JP Morgans financial statements in the
operating model module.
4.6 Linking the Statements & Regulatory Capital (Video Length: 26:34)
In this video, you'll learn how to calculate SunTrust's Tier 1 Capital, Tier 1 Common Capital, and other
regulatory capital ratios and how to use these requirements and its Net Income to determine the
maximum allowable dividends that can be issued each year.
4.7 Transaction Assumptions and Sources & Uses (Video Length: 16:34)
You'll learn how to set up the transaction assumptions for the JP Morgan / SunTrust acquisition here,
and how to determine the financing structure and the implied exchange ratios.
4.8 Core Deposit Intangibles (Video Length: 22:17)
In this lesson, you'll learn what Core Deposits and Core Deposit Intangibles mean and why they get
created in a bank M&A deal. You'll also learn how to estimate the Core Deposit Intangible balance and
how to take into account the after-tax impact of amortization and writing off existing intangibles.
4.9 Cost Synergies (Video Length: 12:44)
This video will teach you how to estimate the cost synergies in a bank merger model, and how to
recognize the cost savings and associated restructuring expense over time.
4.10 Deposit Divestitures (Video Length: 17:27)
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In this lesson, you'll learn why banks are often required to divest deposits in M&A deals due to federal
regulations; you'll also learn how to estimate the lost Net Income and the Net Income benefit from a
deposit divestiture, and how it affects the pro forma balance sheet.
4.11 Calculating the Restructuring Funding Expense (Video Length: 8:51)
You'll learn how to estimate the cash and non-cash portion of the restructuring expense each year, and
how to estimate the after-tax impact of funding this restructuring expense in this lesson.
4.12 Purchase Price Allocation (Video Length: 12:06)
In this video, you'll learn how purchase price allocation differs in bank merger models; you'll also
understand how to factor in items like Core Deposit Intangibles, the Restructuring Reserve, and Deferred
Tax Liabilities.
4.13 Pro-Forma Combined Balance Sheet (Video Length: 40:05)
In this lesson, we'll combine the balance sheets of the buyer and seller and make all the required
transaction adjustments we will also project the combined balance sheet and balance it properly while
taking into account the transaction adjustments.
4.14 Federal Funds Sold and Federal Funds Purchased Differential (Video Length: 10:28)
You will balance the combined balance sheet in this lesson by adjusting the federal funds sold and
federal funds purchased line items to reflect additional or reduced funding; you'll also learn how to
estimate the after-tax income statement impact of this federal funds differential.
4.15 Pro-Forma Combined Regulatory Capital (Video Length: 25:14)
In this lesson, you'll learn how to combine Tier 1 Capital and Tier 1 Common for JP Morgan and
SunTrust, and how the acquisition effects and deposit divestitures change the numbers. You will also
learn why we need to analyze this separately and how it affects the combined company's dividend and
stock repurchase levels.
4.16 Pro-Forma Combined Dividends (Video Length: 15:23)
We'll adjust the combined company's dividend levels in this lesson to correspond to the new levels of
regulatory capital and the new target Tier 1 Common ratio in this lesson and you'll learn how to
account for the cost of funding these additional dividend issuances.
4.17 Combining the Income Statements (Video Length: 21:57)
You'll learn how to combine the income statements of the buyer and seller in this lesson, as well as how
to adjust for the tax rate differential, acquisition effects, and additional shares issued and how the key
accretion / dilution metrics differ from what you see for normal companies.
4.18 Relative Contribution Analysis (Video Length: 16:50)
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In this lesson, you'll learn what the purpose of a contribution analysis is, how to set it up and calculate
the implied exchange ratios and per share purchase prices for two banks, and what the results tell us
about JP Morgan's offer price for SunTrust Banks.
4.19 Calculating the Internal Rate of Return (IRR) (Video Length: 20:01)
You will understand why the IRR of an acquisition often matters more than accretion / dilution to a large
bank, and you'll practice calculating JP Morgan's return on SunTrust Banks in this video. You will also
learn the 3 different ways that the acquisition of another bank can generate a return on investment for
an acquirer.
4.20 Sensitivity Tables (Video Length: 27:03)
In this lesson, you'll create sensitivity tables for this hypothetical JP Morgan / SunTrust deal and learn
which variables impact the EPS and BVPS accretion / dilution the most, as well as which variables we
should NOT analyze.
4.21 Summary Page (Video Length: 16:17)
In this video, we'll go through an M&A Transaction Summary page that presents the key operational,
valuation, and transactional data and you'll learn how to present a bank M&A deal to Partners and MDs
so that they can understand it at a glance.
Resources:
5.1 Why Traditional LBO Models Dont Work for Banks and What to Do Instead (Video Length: 20:19)
In this introductory lesson, you'll learn why the standard leveraged buyout framework does not apply to
commercial banks, why buyouts of depository institutions are so rare, and how a private equity firm can
realize high returns when acquiring a bank without using leverage in the traditional sense.
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You'll learn how an insurance company's financial statements differ from those of a normal company in
this lesson, and how Life Insurance and P&C Insurance statements differ via an analysis of Travelers
Companies' and MetLife's statements.
6.5 Insurance Overview Operating Model Part 1: Premiums and Commissions (Video Length: 21:57)
In this lesson, we'll project the gross and net premiums as well as the commissions and DAC asset for a
brand-new insurance company and you'll learn how to make the key assumptions that drive the rest of
the operating model.
6.6 Insurance Overview Operating Model Part 2: Losses and Expenses (Video Length: 13:20)
You'll learn how to project the Loss & LAE Ratio based on inflation and policy rate growth, as well as how
to project the cash losses paid out and the loss reserves in this lesson. You'll also learn how to simplify
the loss projections over the normal loss triangle you create.
6.7 Insurance Overview Operating Model Part 3: Income Statement (Video Length: 7:46)
In this video, we'll project the insurance company's income statement and you'll learn how to link
together the premiums, underwriting expenses, and investment and interest income / expense and
calculate everything down to the net income line item.
6.8 Insurance Overview Operating Model Part 4: Balance Sheet and Cash Flow Statement (Video
Length: 15:19)
You'll learn how to link together the "grossed up" balance sheet and cash flow statement for the
insurance company in this lesson, and you'll see how the completed statements affect the income
statement and previous supporting schedules.
6.9 Insurance Overview Operating Model Part 5: Statutory Accounting and Key Ratios (Video Length:
28:21)
In this lesson, you'll learn the motivation for statutory accounting and how it differs from GAAP / IFRS
accounting; you will also learn how to calculate key metrics and ratios for insurance companies and
what those numbers tell you about their performance and valuation.
6.10 Insurance Overview Valuation and Key Multiples (Video Length: 28:38)
You'll learn the key relative and intrinsic valuation methodologies for insurance companies in this lesson,
including valuation multiples and concepts such as embedded value and the dividend discount model;
you'll also learn how valuation differs for P&C vs. Life Insurance companies.
6.11 Insurance Overview P&C Insurance Relative and Intrinsic Valuation (Length: 36:53)
In this video, we'll walk through several examples of how to value P&C Insurance companies - public
comps and the appropriate multiples, the dividend discount model using solvency ratios, and the Net
Asset Value (NAV) model.
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6.12 Insurance Overview Embedded Value for Life Insurance (Video Length: 29:07)
You'll learn what Embedded Value is, why it applies to Life Insurance companies, and how to calculate it
over a 20-year policy term as well as for a new insurance company with shorter policy terms in this
lesson; you'll also learn why EV and NAV converge on the same value for a single year of policies.
6.13 Insurance Overview P&C vs. Life Insurance (Video Length: 20:06)
In this final overview lesson, we'll walk through how P&C and Life Insurance companies differ from
their business models to their accounting and financial statements to their valuation metrics and
multiples. Well also review the key concepts taught in the previous 12 overview lessons of the module.
I no longer even offer 1-on-1 consulting, and the last time I did offer it, the price was over $300 per
hour.
And even when you had hired me for a session, you couldnt ask questions 24/7 and receive responses
on any topic you could think of our time was limited to the session itself.
This support function and the superb community of Breaking Into Wall Street mean that you get an
even better deal its like getting a detailed guide, hiring a seasoned coach to answer your questions,
and getting to access the experience of thousands of previous and current students.
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Ive personally been through both courses above. They certainly cover some good material, but they
also have a few shortcomings:
Wall Street Training includes nothing on valuation, merger models, or LBO models thats over
50% of interview questions right there. And while the insurance course is good, theres nothing
on Life Insurance companies, which are much different from P&C Insurance companies.
Wall Street Prep includes nothing on Dividend Discount Models or public comps / precedent
transactions, merger models, or LBO models and does not include the loan portfolio and loan
loss reserves in the bank operating model projections. And theres nothing on insurance
companies.
Theres no Certification Quiz in either course, so you cant test your knowledge or prove to
employers what you learned.
You get more material overview, accounting, regulatory capital, operating model, and full
valuation all based on a case study of JP Morgan and SunTrust Banks. Plus, you get insurance
lessons that teach you all the fundamentals, how to create an operating model for a new
insurance company, and how to value it.
Everything has been designed for online, interactive learning, from the ground up these are
not re-hashed classroom training seminars.
Everything is downloadable, in multiple formats, so you can take your training with you
wherever you are.
It comes with our famous 100% No Hassle 12-Month Money Back Guarantee.
And you get to take our challenging Certification Quiz if you score above 90%, youll receive a
Certificate that you can use to prove to employers what you learned in the course.
All for an investment of just $247 (rather than $399 or $1,500 for the other, less complete
courses).
Thats a 40%+ discount for MORE content, lessons, and more in-depth material.
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I actually thought about raising the price because this is extremely specialized content good luck
finding these lessons in standard finance books or via Google searches (I tried many times and failed
thats why most of the material comes directly from FIG bankers instead!).
And $247 is still a big discount to the other courses above this is specialized information that makes
you far more valuable than if you simply knew basic accounting and valuation for other industries.
Gaining extremely specialized knowledge in a field where theres always high demand for
people who know what theyre doing.
Differentiating yourself from other candidates even the very best ones with the top academic
pedigrees and high grades.
Proving beyond doubt to potential employers that youre someone who is prepared to go
above and beyond to be the best and get resultswhich is exactly the type of person finance
firms love to hire.
Youre setting yourself up for a job that pays a minimum of $100,000 that's a 400x return on
investment. (Good luck getting that in the stock market!)
Even if were super-conservative and assume that you only have a 10% chance of landing the job after
going through this Course, thats still a 40x ROI for you.
Plenty of other training firms would charge you thousands of dollars for this same content, but why
bother when you get a much higher ROI from your investment with us?
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Thats right take a full 12 months to evaluate everything inside the Course, and if youre not 100%
satisfied, simply contact us via the Contact link displayed on every page of the site and ask for your
money back. Youll receive a prompt and courteous refund.
There are no strings attached, no special terms or conditions, and no fine print.
(Including all bonuses, expert support, immediate access and a 12-month Money-Back Guarantee on
everything) all for just $497 (savings of $244).
Knowledge and skill in these three specialized disciplines will truly set you apart from the pack, and I
promise you they will never be offered at a lower price than this.
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